The wealth divide.

There is a whole industry based on our desire for instant wealth – gambling.

We’re all dreaming of winning big.

I’ve been there. I used to play the Saturday X-lotto at $9.00 each week, where the chances of winning a life changing amount of money are around one in eight million.

I’ve made more money from X-lotto in the two years since I stopped playing than from all the years I played, simply because the money stayed in my account, instead of passing into a pool that is divided up between the winners, the operators and the government.

It doesn’t matter which form of gambling you look at, there are only two groups consistently taking home the money: the operators and governments. It’s not the punters.

Understanding money
Many of us do not understand money or the financial system – even the people operating the financial system don’t fully understand it, which is why we have global financial crises.

A lot of us are following, what Robert Kiyosaki so elegantly calls in Rich Dad Poor Dad, the Poor Dad philosophy.

The fundamental rule we all need to come to terms with, if we are to break away from the Poor Dad philosophy is: spend less than you earn and invest the surplus in income generating assets.

I know from my own experience that sometimes that is almost impossible to pull off, however, unless you do, financial independence will elude you. You will always be living from payday to payday, and hoping there will be some form of social security to support you later.

It’s not that you have to avoid debt. There is what is referred to as good debt – debt backed by assets which appreciate in value or generate income, or both. For example, debt used to buy property or shares. However, there is also what is known as bad debt – debt incurred to support lifestyle choices, for example going on vacation, buying a new wide screen TV or the latest must have device.

The good debt provides you with a source of income or capital gain to pay the money back to the lender.

The bad debt provides you with nothing but fleeting enjoyment, and you have to pay back the money you borrowed, plus interest, from your normal income stream. The biggest debt trap for unwary players is the credit card.

This is one of the facts of money, discussed by Kiyosaki in Rich Dad Poor Dad, which we can all do something about. But it requires being able to resist the lure of all that advertising, designed to keep us locked into purchasing before we actually have the cash to pay.

Another part of the money game, discussed by Kiyosaki, is that to be financially independent you need to have your own business with multiple sources of income. This is the Rich Dad philosophy we hear so much about.

A question of balance.
That philosophy may work for some, but I’m not sure we’re all cut out to be in business. For most of us, the game is about finding a balance between the Rich Dad and Poor Dad philosophies.

For society to function, we need people to work in service industries, to provide the services of government like law enforcement, education and public safety, and to work in the businesses of all the Rich Dads, so that the goods and services they provide are available for the rest of us to consume.

It’s okay to be an employee or a public servant. It’s okay to be in business.

What’s not okay, in my opinion, is irresponsible consumption and the exploitation of employees.

I suspect that one of the reasons why so many of us chase after ‘Get rich quick’ schemes, is simply a desire to improve our own situation, because it appears that there is no other way.

The real problem.
When you think about it, there is something wrong when someone working full time, in a highly industrialised economy, does not earn enough money to pay for the basic necessities of life. And, let’s not forget all those in far more depressing situations in less developed economies.

In recent times the wealth discussion has focussed on the 1% versus 99% divide, with Oxfam suggesting that the top 1% will soon own more than 50% of the economic wealth on earth.

I can’t see how we can continue to support the current situation, where a privileged few live in opulence and so many live in destitution.

Regardless of your position on the wealth ownership spectrum, what do think can be done about the current wealth divide that will improve the lives of the millions of people who own nothing?